NMU publishes War and Strikes Risks Update – 29th May 2023

Authored by NMU

This page provides information for existing policyholders and their brokers. Policyholders who have questions or wish to arrange or amend cover should contact their broker. Brokers can find details of how to contact us here.

As a result of increased global tension, insurers and reinsurers are adopting a “Five Powers” war exclusion

Loss, damage, liability or expense arising from the outbreak of war between any of: the United Kingdom, the United States of America, France, the Russian Federation, the People’s Republic of China.

We will be applying this to all new and renewal cargo policies attaching on or after 1 June 2023.

The current situation in Ukraine and the related sanctions and export controls are widely known, and many businesses will be unwilling or unable to ship goods to or from the affected region.

War and strikes cover to the region is not automatically available.

This month, the risk level for Sudan has increased from High to Severe; but cover for sendings to or from Sudan is not generally available.

For Cargo Insurance policies arranged by NMU, the availability of cover against war and strikes risks is determined by Munich Re Syndicate Ltd (MRSL) by reference to the risk levels within the JCC Cargo Watch List, which are established independently by S&P Global (formerly IHS Markit) for the Joint Cargo Committee of Lloyd’s and the IUA (commonly known as “the JCC”).

Other considerations are also used in determining whether cover is available; examples include UK and international sanctions, internal controls and risk appetite.

The geopolitical situation in every country and territory is continually monitored by S&P Global, and their risk scores are updated monthly, or more frequently if there is particular conflict, unrest or political instability.

There are seven risk levels that correspond to the risk scores:

Low – 0.0 to 0.7Moderate – 0.8 to 1.5Elevated – 1.6 to 2.3High – 2.4 to 3.1Very High – 3.2 to 4.3Severe – 4.4 to 6.4Extreme – 6.5 and higher

The JCC Cargo Watch List was most-recently updated on 10 May 2023, with the significant changes:

The risk level for Sudan has increased from High 2.8 to Severe 5.1

Corresponding MRSL rate changes take effect from 09:00 GMT on 29 May 2023.

Cover

Details of the cover provided against war and strikes risks can be found in the policy wording and/or the applicable Institute War Clauses and/or Institute Strikes Clauses which form part of the policy.

War risks means war, civil war, rebellion, insurrection or civil strife. It also includes damage caused by derelict mines, torpedoes, bombs or other weapons of war. War risks are only covered during transit by sea or air.Strikes risks means damage caused by strikers, riots or civil commotions (“SRCC”). It also includes terrorism in the UK.

If countries or territories are in the news because of events like these, then it can be considered likely that exposures will at the very least be subject to additional premium. And in particular, for those classified as Very High, Severe or Extreme by S&P Global, the availability of war and strikes cover must be checked in advance, as explained below.

Information about risks posed worldwide is available from various sources, including cia.gov/the-world-factbook/

Application

For most countries and territories, NMU premiums are inclusive of MRSL’s basic rate for war and strikes risks cover, the exceptions being:

Where covered, countries and territories for which the Risk Level is Elevated or High will be subject to a surcharge rate not exceeding 0.10% and 0.15% respectively.The availability of cover (if any), the terms and conditions and the rate for countries and territories where the Risk Level is Very High, Severe or Extreme is subject to change, and will only be determined at the time of shipment or the attachment of risk; prior notice of any such shipments or exposures must be given to us.In exceptional circumstances, the availability of cover (if any), the terms and conditions and the rate for certain other countries and territories will also only be determined at the time of shipment or the attachment of risk, even though the Risk Level is High; prior notice of any such shipments or exposures must be given to us.

The surcharge rate or the availability of cover (if any) is applied in the following way:

For transits, at the time transit commences.For storage that is not in the ordinary course of transit, if insured, by reference to the most recent update to the JCC Cargo Watch List on an ongoing basis (SRCC cover only).

Full details of the countries and territories within these groups can be found below.

This information is valid until the next change in the JCC Cargo Watch List, which is reviewed every month, or more frequently at times of heightened tension.

Risk Level = Elevated

These countries and territories are subject to a surcharge rate not exceeding 0.10%:

ArgentinaBangladeshBrazil3BurundiEgyptEritreaGeorgiaGuineaIndiaIndonesiaIvory CoastKenyaNorth Korea1PeruQatar4South KoreaTurkeyUnited Arab Emirates4Venezuela3

Risk Level = High

These countries and territories are subject to a surcharge rate not exceeding 0.15%:

Burkina FasoCameroonColombiaDemocratic Republic of the Congo (formerly Zaire)EthiopiaIsraelMexicoMozambiqueNigerPakistanRussia2 (except the region noted below)

Risk Level = High, Very High, Severe or Extreme

The availability of cover (if any), the terms and conditions and the rate for these countries and territories is subject to change, and will only be determined at the time of shipment or the attachment of risk; prior notice of any such shipments or exposures must be given to us:

Afghanistan1Central African Republic3ChadIran1Iraq1Lebanon3Libya3Mali3NigeriaOccupied Palestinian Territory (being the area defined by the EU and the UN as the Gaza Strip and the West Bank, including East Jerusalem)Persian or Arabian Gulf and adjacent waters including the Gulf of Oman west of Longitude 58°E, in respect of bulk oil and petrochemical products including LNG and LPGRussia2 (within 200km of land border with Ukraine plus Black Sea within territorial waters)Saudi ArabiaSomalia3South Sudan3Sudan1Syria1Ukraine1Yemen3

Notes

1 Sendings to, from, within or via this territory is anyway not normally covered unless specifically agreed by us in writing.

2 Sendings to, from or solely within this territory is anyway not normally covered unless specifically agreed by us in writing.

3 Sendings to, from or solely within this territory is anyway not normally covered beyond the port, airport or land border of arrival unless specifically agreed by us in writing.

4 Cover for sendings of bulk oil/petrochemical interests including LNG and LPG transiting through the Persian Gulf/Gulf of Oman, irrespective of the destination country and where it sits within the JCC Cargo Watch List is not available.